Minutes of the Finance & Business Operations - 30 June 2020
|Group||Minutes of Finance & Business Operations Committee|
|Location||HELD BY REMOTE ACCESS THROUGH MICROSOFT TEAMS|
|Date||30th June 20|
|Minutes Membership|| In attendance by electronic device and contributing towards the meeting quorum, in accordance with Instrument 12. (Members may count towards the quorum if they are able to be present by electronic or digital communication (including attendance by video conferencing or telephone conferencing). |
G. Channon, R. Heath (Chair), G. Mills (co-opted Committee member), D. Pulford (co-opted Committee member), J. Staniforth (Principal/CEO), P. Tucker and R. Wilson.
|In Attendance|| In attendance by electronic device |
Member of the Senior Leadership Team:
M. Brown, Group Vice Principal, Information ＆ Strategic Development (GVP – I&SD)
D. Lucas, Group Vice Principal, Human Resource Development (GVP – HRD)
P. Partridge, Finance Director (FD)
Clerk to the Board, T. Cottee
Prior to the meeting, the Chair welcomed the GVP – I&SD and the GVP – HRD to the meeting.
32/20. Declarations of Interest
R. Heath declared a standing interest as an employee of Harper Adams University.
33/20. Minutes of Meeting Held 02 June 2020 (Appendix – Agenda Item 3)
Resolved: That the Minutes of the meeting held on 02 June 2020, be approved as a true and correct record.
34/20. Matters Arising
Further to F&BO Min No. 22/20 (Matters Arising), the Committee received a verbal update on the partner organisation (JCA) that had failed in its application to remain on the Register of Accredited Training Providers (ROATP). The GVP – I&SD provided a verbal update on how the College was supporting affected apprentices.
At the request of the Chair, the Committee agreed that agenda items be taken out of order, as follows -
35/20. Fees Policy 2020 – 2021 (Confidential Appendix – Agenda Item 8)
The Committee considered a report (previously circulated) setting out a request to approve the proposed College Fees Policy for 2020 - 2021.
The GVP – I&SD explained how the Draft Policy had been amended to reflect –
- The annual change to the lowest income levels; and
- Amendments to sections to resolve inconsistencies around HE students wishing to withdraw from or intermit/suspend their studies.
The Committee required, going forward, that draft policies submitted for approval show ‘tracked changes’.
In response to a question from the Staff Governor (Support), the GVP – I&SD confirmed that there had been no demand for a return of the parent voluntary contribution. The Principal/CEO confirmed that there was no expectation on the part of the College for parents or students to make voluntary contributions.
In response to a question from the Staff Governor (Support), regarding who would fund examination ‘re-sit’ charges, the Principal/CEO confirmed that this issue had yet to be clarified at a national level. Currently, the College was expected to pay examination boards and invigilators for 2019/20, regardless. The Director of A Level Studies was currently drafting guidance for students who may wish to resit in the autumn series.
Resolved: That the Draft Fees Policy 2020 – 2021, be RECOMMENDED TO BOARD.
36/20 Subcontractor Policy (Appendix – Agenda Item 9)
The Committee considered a report (previously circulated) setting out a request to approve the Draft Subcontractor Policy for 2020 – 2021.
The GVP – I&SD explained that the Board was requested to adopt the Policy annually, as an ESFA Funding requirement. He explained that the Draft Policy this year, had been updated to reflect new funding requirements. The College’s subcontractor processes and controls were also subject to an annual internal audit report.
In response to a question from the Board Chair on how the College ensured that its contractors met the College’s student safety and safeguarding standards, the GVP - I&SD confirmed that any new contractor was subject to rigorous checks on appointment. In addition, the College required all contractors, annually, to supply copies of their relevant policies and procedures for checking against the College’s own standards. The College also undertook due diligence with students to check their awareness and understanding of these policies. The College also worked with its subcontracting partners to identify and then support vulnerable students.
In response to a question from the Board Chair, the GVP – I&SD explained that students working with subcontract partners completed the annual Apprenticeship survey, which was more appropriate to their student experience, than the College’s Student Perception of College Surveys.
Resolved: That the Draft Subcontracting Policy 2020 – 2021, be RECOMMENDED TO BOARD.
37/20. Management Accounts - 1 August to 31 May 2020 (Appendix – Agenda Item 6)
The Committee considered a report (previously circulated) on the management accounts for the period to 31 May 2020, which highlighted the key results, measures and risks.
The Committee reviewed the Accounts and noted that the outturn EBITDA had been reforecast which overall had resulted in the improved forecast EBITDA position, taking into account -
- The Reversal of the West Midlands Combined Authority (WMCA) notice of termination of contract;
- Additional Furlough pay costs reductions had been included in the pay forecast for both June and July. In addition, the restructuring costs forecast had been reduced;
- Estates and other costs had been increased to reflect the likely increase in operating costs and additional Personal Protective Equipment (PPE) and consumables required to support the wider opening of the College in June and July; and
- The refunding of payments for trips and visits taken in advance had been accounted for.
The Committee reviewed the key changes to the forecast outturn –
- The revised forecast reflected the impact of coronavirus and the savings targeted as a result of the shut-down of the College in April and May 2020.
- Expenditure in May remained within the revised forecast.
- In almost all cases the College had continued to support apprentices remotely with the theoretical aspects of their training, with around 95% of apprentices engaging with College online learning services. On programme funding assumptions reflected this level of engagement, and achievement funding assumptions reflected that, in many cases, the College would be able to complete apprenticeship courses as planned and therefore earn a proportion of the budgeted achievement funding in 2019-20.
- Forecast Pay Costs had been re-adjusted to reflect that, at this stage of the year, all contract changes likely to incur restructuring costs had been agreed and the anticipated ongoing furlough claims.
- The forecast had been adjusted to reflect differences in depreciation and release of deferred capital grants and deferral of capital expenditure arising as a result of the COVID pandemic.
- Capital expenditure for the rest of the year had been frozen with the exception of the Automotive Workshop project.
- The FD provided a verbal update that the College had been advised that the two Condition Improvement Fund (CIF) grant applications had not been successful.
- The forecast cash-flow for the remainder of the year had been updated to reflect the expected initial stage payment investment in the automotive workshop at the end of June and the expected grant receipts from the LEP after the end of July. The anticipated year end cash was improved as a result compared to the April forecast reported to Board.
- NatWest had offered a loan repayment holiday for up to 12 months as part of its support for business. The FD reported that he had been in dialogue with the Bank regarding this option.
The key financial risks facing the College were driven by the disruption of Coronavirus and the current high level of uncertainty inherent at this stage. Whilst, since the initial report to Board in April 2020, College leaders felt more confident about the 2019-20 outturn as some of these risks had reduced, there remained a degree of uncertainty regarding timing and the ability of the College to resume “normal” operations.
Resolved: That, having considered the report, the Committee received the Management Accounts to 31 May 2020.
36/20. College Financial Forecast and Draft Budget 2020/21 (Confidential Appendix – Agenda Item 6)
The Committee considered the Draft Budget 2020 – 21 (previously circulated).
In summary, the FD reported that it had been challenging to prepare a Budget in light of the uncertainties surrounding the impact of Covid-19 and, as a result, had taken a prudent approach to projections.
- The 2020 – 21 Draft Budget and 2021 – 22 Draft Plan would meet the financial objectives set as part of the 2017-18 budget setting process, with the exception of an objective to generate a minimum EBITDA of 5%. The target for 2021 – 22 was 4.74%.
- The impact of the pandemic had reduced the budget EBITDA for 2020 - 21, compared to the projected percentage set out in the Integrated Financial Model for Colleges (IFMC) prepared and submitted to the Education & Skills Funding Authority (ESFA) in February 2020.
- The Capital expenditure in the Draft Budget included a proportion of LEP funding towards the new automotive workshop being built and represented a net investment in line with the initial IFMC Plan.
- In response to a question from a co-opted Committee member, the Principal/CEO explained that the 16 – 19 Education and Skills Funding Agency (ESFA) grant income for 2020 – 2021, was based on enrolments in September 2019 and therefore was confirmed. The projected grant income for 2021 – 22, was planned in line with anticipated student enrolments in September 2020. Modelling of these estimates had been based on median projections from current applications and historic patterns of applications and enrolments, significantly discounted to take account of the eventual outcome of the College’s recent Ofsted inspection and/or any reputational damage as a result of industrial action affecting the College.
- The Principal/CEO explained that the College was currently operating a programme of remote pre-enrolment activities to support Year 11 students in partner schools. Whilst the Draft Budget incorporated an anticipated net reduction in recruitment of c.205 students in September 2020, he considered that enrolments for 2021-22would also be impacted. The Committee acknowledged that the Draft Budget and Plan took a prudent approach to estimating enrolment numbers as, should the actual student enrolments not be as high as anticipated, this would adversely impact income for 2021-22.
- The impact of the COVID pandemic on conversion of applications to enrolments in September 2020, was currently unknown. The Principal/CEO explained that the College was particularly exposed to concerns regarding travel from students who had more local alternative sixth form providers, such as those travelling from Telford or Powys. No additional discount had been made to the 2021-22 plan for this risk.
- Capacity and Delivery Funding had been included in the ESFA allocation for 2020-21, to enable and support work placement activity for students. However, as colleges with an Ofsted Grade 4 were not eligible for this funding, it had been excluded from the 2020-21 budget and 21-22 plan.
- With respect to Teachers’ Pension Grant, for budgeting purposes the initial allocation had been extrapolated to cover the period from April to July 2021. There were no commitments at this stage, to extend funding for the teachers’ pension cost increase past the end of 2020/21. The second year of the Draft Plan assumed that this additional funding continued in some form.
- Advanced Learner Loans projections had been modified to reflect the risk of lower than planned enrolments as the result of the COVID pandemic and higher than normal withdrawal rates for those on ongoing courses.
- In setting the budget for Apprenticeship own delivery, prudent estimates had been made to determine the levels of activity planned. Primary sectors of the College’s apprenticeship provision (Construction, Manufacturing & Engineering) had, to date, been less affected than other sectors (such as hospitality or retail). As part of the planning process the College had allowed for higher than normal withdrawals or delays to apprenticeship starts as a result of the Covid pandemic; this being based on month-by-month modelling and current intelligence. As part of planning for apprenticeship delivery in 2020-21, the College had increased costs to allow for End Point Assessments (EPA) on new apprenticeship standards.
- Tuition and exam fees budget had been modified to reflect the risk of lower than planned enrolments as the result of the COVID pandemic and higher than normal withdrawal rates for those on ongoing courses.
- Higher Education income for 2020-21, had been based on expected enrolment activity by course as moderated by student number control measures designed to protect students and universities during the coronavirus outbreak. This limited the College’s ability to meet demand for its courses and put at risk student numbers currently delivered in partnership with Staffordshire University, which had similar controls applied to its student numbers. No increase had been budgeted in 2021-22, due to the student number controls as it was uncertain as to when or whether they would be removed.
- The College had seen a significant increase in applications from students with high needs support resulting in the growth of budgeted ALS income. In 2020-21, the College anticipated another significant increase, based on applications already received. This additional income would be offset by increased staffing costs. Staffing costs for 2020-21, assumed continued consolidation of high performing agency Teaching Assistants within the permanent staff team and an additional five permanent Teaching Assistants with a further five additional agency Teaching Assistants and other non-pay High needs support costs also increasing to meet this growing need.
- Lettings, Catering and Other Income were planned to continue at reduced levels as the result of the COVID pandemic, including that catering activity would not re-commence until November 2020 and then at reduced levels for the rest of the academic year. These sales reductions were offset by corresponding reductions in costs of sales. Income from the London Road Sports Centre had also been reduced to reflect the impact of the pandemic; this was anticipated to recover in 2021-22.
- The significant disruption to teaching created by the pandemic was likely to require additional resource and activity to support students to catch up next year. A contingency had been added to allow for one-off additional costs incurred in supporting students to catch up. This additional expenditure was anticipated not to occur in 2021-22.
The Staff Governor (Support) observed that the College currently had students with ALS needs that did not attract additional funding. During lockdown, many of them had been supported by Student Support Teams. The Staff Governor asked what provision had been made in the draft budget to continue this support, especially with meeting the needs of a new cohort of students, should the College be required to continue a form of blended or remote learning from September 2020.
In response to questions from the Staff Governor (Support), Principal/CEO explained that the Draft Budget and Plan made provision to effectively meet the needs of ALS students and students who held EHCPs and referred to the review of this provision and the investment in additional staff in the High Needs Team to ensure their needs were met across all three campuses.
The Finance Director shared the projected Budget Cash Flow (previously circulated) and explained that –
- Capital Expenditure was to be financed from operating cash. The level of expenditure fell within the College’s loan covenants and was within the planned operating cash budgeted to be generated. The Committee endorsed this approach, which managed and reduced the financial risks of higher borrowing and breach of loan covenants.
- The annual cash low point in March/April each year, assumed the suspension of loan repayments for 12 months and reduced income in line with the budget. As in 2019-20, short term overdraft facilities were expected to be put in place to cover March and April 2021, to ensure that the College had sufficient cash to meet its requirements during this short-term period.
- In the event that income in early 2020-21 was below expected levels, capital expenditure might be deferred to ensure that the College retained appropriate working cash-flows. In response to a question from the Board Chair, the FD confirmed that the College had not had cause to use its overdraft facility in 2019-2020.
Having received a full report from the FD, the Committee considered if it had received adequate assurance with regard to the assumptions around income and costs set out in the Draft Budget and Plan. The Committee considered that the key/risks and assumptions set out in the Draft Budget reflected the challenges facing the College and agreed that the Draft Budget did reflect a prudent forecast on enrolment.
The Committee expressed its thanks to the FD and the Finance Team for their hard work in preparing the Draft Budget and Plan and recognised the challenges presented for the 2021/22 year in terms of managing the impact of a possible drop in student enrolments and managing a planned deficit budget. The Committee expected the senior leadership to plan and communicate clearly this, once clarified, to staff.
After extensive consideration, the Committee
RECOMMENDED TO BOARD: the Draft Budget 2019 – 20.
37/20. Human Resources & Development Report (Appendix – Agenda Item 7)
The Committee received the annual Human Resources and Development Report (previously circulated).
The Committee received information on -
- Current College staffing levels;
- The HR Team roles and responsibilities;
- How the HR Team supported the College’s strategic objective that it will be considered an outstanding place to work such that it is considered an employer of choice;
- Professional Development update with respect to mandatory development and higher-level study;
- Workforce Development update including the 2020 Teachers’ Conference, Sharing Fair activity, Innovation Fund Projects and the introduction of the Learning Enhancement Team. A report on the impact of the Team had been previously circulated;
- College staff turnover and recruitment, appointment and induction activity;
- HR caseload Report;
- Staff Wellbeing Update, including a full report on how the College had supported staff wellbeing during the partial College closure; and
- Communication and Policy activity.
The Committee particularly noted that -
- The College continued to attract high quality candidates for vacancies. Despite the recent OFSTED Inspection outcome, candidates specifically expressing their desire to work at the College. The GVP – HRD explained that the College had changed its approach to recruitment and offered competitive packages.
- The Team had launched the Mental Health at Work Plan in October 2019. The College had, to date, appointed and trained 18 Mental Health Champions, held a Wellbeing Day in January and 25 people had trained in mental health first aid delivered by St Johns Ambulance.
- A significant amount of resources to support people working from home had been provided by the College both in terms of equipment to support safe working and mental health resource signposting.
- In response to a question on how the College was seeking assurance on the well-being of staff working remotely, the GVP – HRD explained that, during the partial closure of the College, line managers were expected to continue to not only hold staff meetings and 1-2-1s but also maintain social contact with staff, some of who lived alone, and communicate any concerns to the College HR team. Additionally, individuals had approached the College for support, as the College had worked hard to remove the stigma of ‘asking for help’. One of the HR Team was a trained counsellor and had offered support and resources to some staff.
- Staff engagement in the College’s ‘In the Loop’ had increased during 2020.
- The 2020 Staff Survey was currently ‘live’.
- The GVP – HR&D continued to hold weekly meetings with the recognised unions.
40/20. Committee Impact on Strategic Goals (Appendix – Agenda Item 10)
The Board Chair explained that, going forward, each ‘core’ committee and Board would, at every meeting, review the College’s Strategic Project Plan (circulated at the meeting), to assess how the Committee’s work had impacted on the delivery of the projects and in meeting set KPIs. The Committee reviewed the relevant actions for progress made, how the Committee could evidence that progress had been made, and had the Committee been effective in monitoring progress and providing support and challenge.
The Committee acknowledged that the HR Annual Report had addressed progress against relevant projects and that the driver for the College’s Budget centred on delivering the College’s strategic goals.
The progress against actions would be reviewed and refined as soon as the Board could hold safely a strategic planning day. It was suggested that the Board also take the opportunity to consider financing opportunities for projects in terms of educational benefit and sustainability.
41/30. Risk (Appendix – Agenda item 11)
As part of the discussions on the College’s Risk Register (previously circulated) agreed by Board (Board Min No. 19/20 refers), the Committee examined those risks within its remit to ensure that they have either been identified or adequately discussed at the meeting. The Committee agreed that the Draft Budget and Plan had effectively identified the risks and cross-referenced them with the College’s Strategic Risk Register.
42/20. Committee Evaluation 2019 - 2020 (Appendix – Agenda Item 12)
At the end of the 2018 – 2019 governance cycle, the Board and each committee completed an evaluation exercise and governors were requested to undertake an individual self- assessment in July 2019. These informed the Board’s self-assessment return and improvement action plan 2019 – 2020.
The Committee Chair directed members to consider the Committee’s performance during 2019 – 2020 and submit the outcome to the Clerk.
43/30. Further Item of Business – Education and Skills Funding Authority (ESFA) Letter to Colleges Financial Statements 2018 to 2019
The Principal/CEO referred to a letter received from the ESFA (previously circulated) advising that, following its review of the College’s audited financial statements and finance record, the ESFA had confirmed the College financial health grade as ‘Good’. The ESFA had also reviewed the College’s audited financial statements, financial statements management letter and the annual report of the Audit Committee and had not identified any significant financial control concerns from this review.
44/20. Date of Next Meeting – to be confirmed.
Concluded at 7.54 p.m.